Analytical Procedures
Evaluations of financial information by studying plausible relationships among financial and nonfinancial data.
AUD loves to test the three phases: required as risk-assessment procedures during planning (technically driven by AU-C 315, often labeled “AU-C 520” on exams) and required in the final overall review under AU-C 520, but optional as substantive procedures. The classic MCQ “tell” gives a phase and asks whether AP is mandatory — pick “required” only for planning and final review; substantive AP is a choice you make when it’s more effective or efficient than tests of details. That question hinges on the precision of the expectation: it works best for stable, predictable relationships (e.g., recurring revenue), and you investigate any difference exceeding your pre-set threshold.
Don’t confuse AP with audit sampling or tests of details — AP studies relationships and ratios rather than individual items, so it never “vouches” a transaction. In a review engagement (governed by SSARS, not the audit standards), inquiry and AP are the primary procedures yielding limited assurance; in an audit they support the opinion alongside other evidence. Memory hook: “Plan and Pass” — AP bookends the audit, required at start and end, optional in the middle.
PlayPrepHQ study notes are written and reviewed against primary exam sources. How we create & review content →